MANILA, Philippines – Taipan Lucio Tan-led Philippine National Bank jacked up its first quarter net profit by 11 times year-on-year to P1.2 billion, aided by large gains in trading, foreign exchange and investment securities.

Treasury earnings accounted for 45 percent of total operating income for the period although the bank continued to strengthen its core business. The bank has beefed up its inventory of investments that are available for sale by 32 percent from the level at end-2011.

Gross interest income on loans and receivables was up by 10 percent from the same level in the previous year owing to improved volume and spreads. Net interest income improved by 2 percent year-on-year.

“The robust growth of the bank’s consumer loans and middle market portfolio provided significant buffer to temper the squeeze in spreads from large corporate loans due to stiff competition,” PNB said in a press statement on Monday.

The bank grew its loan book during the period by P3.3 billion to end March at P129.5 billion while deposit base amounted to P227.1 billion. For every peso of deposit liabilities, 52 centavos was lent out and turned into earning assets, rising from 42 centavos a year ago.

PNB also tempered its cost of funds by 16 percent year-on-year with greater focus to the generation of low-cost deposits. The bank also made a formal bid to capture the high networth segment with the launch of its private banking arm: “the PNB Pinnacle Club.”

In terms of asset quality, non-performing loans (NPL) as a ratio of the total loan book dropped to 3.2 percent from 4.2 percent in the same period last year. NPL coverage stood at 82 percent.

IMO, the low foreign participation and hence competition for our local banks is one of the reasons for the relatively high interest rates that industries and farmers have to contend with. This deters them from growing their businesses and increasing their farm output which negatively affects our country's potential for faster economic growth. Maybe we can learn some lessons from the Indonesian banking industry that allows 99% foreign ownership of banks. The Philippines is also mentioned in the paper by the way. Here's the link;

The Increase of Foreign Ownership and its Impact to the Performance, Competition & Risk in Indonesian Banking Industry

Universal and commercial banks in the country are seen able to absorb potential loan losses arising from global economic uncertainties given their rising reserves.

“The industry’s provisioning against potential credit losses remained adequate,” the Bangko Sentral ng Pilipinas said in a report.

Documents from the central bank showed that the average NPL coverage ratio of the universal and commercial banks in the country improved to 124.94 percent as of end-March from 120.37 percent in the same period last year.

The NPL [non-performing loans] coverage ratio is the proportion of soured loans to capital provisioning or “loan-loss reserves” for those loans. A loan becomes “non-performing” or “soured” if these remain unpaid at least 30 days upon maturity.

The BSP said the fact that the loan-loss reserves exceeded the bad debts showed that Philippine banks would remain stable even if a significant number of borrowers would default on their loans.

Amid the prolonged debt crisis in the eurozone, a key export market, economists said there was a likelihood earnings of export-oriented firms would remain anemic this year.

They said this posed the risk of defaults by exporters on their obligations, including bank loans.

The BSP said, however, that in the case of the Philippines, banks were expected to withstand the adverse effects of a rise in loan defaults. It noted that an increase in loan defaults was even a remote scenario, citing that universal and commercial banks in the country generally adopt prudent lending standards.

The central bank earlier reported that the combined non-performing loans of universal and commercial banks in the country amounted to P74.65 billion as of end-March, while their combined outstanding loans reached P3.16 trillion. This resulted in an NPL ratio of 2.36 percent, down from 2.99 percent over the same period.

Non-performing assets (NPAs) of the banks amounted to P184.19 billion, while total assets reached P6.5 trillion as of end-March. NPAs are bad debts plus properties acquired from borrowers who defaulted on their loans. This resulted in an NPA ratio of 2.83 percent as of end-March, better than the 3.32 percent as of the same period last year.

With the favorable indicators, BSP Governor Amando Tetangco Jr. said the country’s banking system was generally sound and stable. Whatever drag the eurozone crisis might cause the Philippine banking sector was something that could be manageable, he said.

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Fellow OFW's, friends and relatives of OFW's. I hope to get the sentiments of my fellow OFW's. Share your thoughts. We can take care of ourselves and ready to get this through, together we stand and do something for our dreams, hope, aspirations. We build our own OFW Bank !! A bank of the OFW, for OFW and by OFW's. Can or No Can do??

A party-list lawmaker has asked the House of Representatives to investigate the collapse of 41 banks in the last 18 months which affected more than 547,000 depositors and displaced 2,000 bank employees.

LPG Marketers Association Rep. Arnel Ty, a member of the committee on banks and financial intermediaries, said the bank failures sent a bad message on the soundness of the banking system.

“We have to ascertain whether existing laws are adequate to discourage unsafe, unsound and fraudulent banking practices, protect depositors, promote savings, support responsible credit, and reinforce public confidence in the (banking) industry,” said Ty.

Unsafe banking practices include excessive reliance on large, high-cost or volatile deposits or borrowing, including the offering of interest rates on such funds at 50 percent more than prevailing industry rates.

Under the law, the undue dependence on solicitations and acceptance of brokered deposits and spending large sums on commissions and referral fees to generate deposits may also constitute unsound banking practices.

Ty has also sought the help of the Department of Labor and Employment (DOLE) in finding new jobs for the displaced bank employees.

He said that more than 2,000 employees had been rendered jobless as a result of the closure of the 41 banks which had a combined network of 220 branches.

“The DOLE and the Bankers Association of the Philippines should find ways to absorb the displaced personnel in the new branches being put up by the bigger universal and commercial banks that continue to expand,” Ty said.

Ty sought the probe as the state-run Philippine Deposit Insurance Corp. (PDIC) began paying the claims of depositors of Export and Industry Bank, which was closed by the Bangko Sentral ng Pilipinas on April 27.

Banks in the Philippines and other emerging economies in Asia now have credit profiles as good as, if not superior to, those in the United States and Europe, according to Moody’s Investors Service.

In a statement, Moody’s recognized that the long-standing assessment that Western banks are more credit-worthy than emerging Asian banks no longer holds true.

The credit rating firm said this development became apparent during the latest global economic turmoil, spawned by some Western banks but which did little damage to Asian institutions.

“The ratings gap that had long separated banks in Asia from their Western peers has now essentially been closed because the credit quality of Asian banks throughout the financial crisis has resulted in a comparative improvement in their ratings,” Jean-Francois Tremblay, an associate managing director for Moody’s, said in a statement.

Moody’s said that despite the uncertainties in the global economy, Asian banks, including those from the Philippines, have shown resiliency and enjoy sufficient liquidity.

“In contrast to Western banks that have experienced significant credit quality challenges since the outset of the global financial crisis, Asian banks are only moderately leveraged, largely deposit-funded and generally conservative in their lending,” Tremblay added.

The statement by Moody’s appears to reinforce the claims of Philippine regulators, who said banks in the country have very limited exposure to the debt woes in Europe.

The Bangko Sentral ng Pilipinas earlier said that its latest stress test revealed that only 1.1 percent of assets of banks in the country are invested in euro-denominated assets,

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Fellow OFW's, friends and relatives of OFW's. I hope to get the sentiments of my fellow OFW's. Share your thoughts. We can take care of ourselves and ready to get this through, together we stand and do something for our dreams, hope, aspirations. We build our own OFW Bank !! A bank of the OFW, for OFW and by OFW's. Can or No Can do??

Manila (Philippine Daily Inquirer/ANN) - American Express Bank and four other foreign institutions have shut down their offices in the Philippines as the financial woes in the United States and Europe prompted them to sell off their offshore assets.
The Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) said the asset sale was meant to help the financially troubled parent firms generate liquidity.
In a circular notifying the local banking industry, the BSP said the five foreign banks have already packed up and left. Apart from American Express Bank, the others were Societe General, Union Bank of California N.A., First International Bank and Fortis Bank.
Societe Generale is based in Paris, while First International Bank is based in North Dakota. Fortis Bank is a subsidiary of BNP Paribas, which operates mainly out of Belgium.http://ph.news.yahoo.com/5-foreign-b...054001722.html

The Bangko Sentral ng Pilipinas said the Philippines would not suffer from a “deleveraging” in the banking sector similar to that being experienced by financial institutions in Europe, saying local banks have more than enough resources to accommodate higher capital requirements being imposed worldwide.

BSP Governor Amando Tetangco Jr. said that unline banks in the eurozone, those in the Philippines enjoyed capital levels that were way above existing standards. He said that a tightening of capital requirements would not force banks in the country to dispose of existing assets just to comply with the new rules.

He cited the capital adequacy ratio (CAR) of most banks in the country at 16 to 17 percent, way above the 10-percent minimum currently required by the BSP and the 8-percent floor prescribed internationally. Of the CARs, between 13 and 14 percent are Tier-1 capital, which are mostly retained earnings and common stocks and are thus considered of better quality compared with capital sourced through bond issuances.

“[Developments in Europe] are not very encouraging thoughts, but the upside is that we [BSP] do not believe right now that such is the case for the Philippines,” Tetangco said.

Deleveraging, or the act of divesting assets, has heightened in Europe following the need to raise more capital to meet higher capital requirements to be imposed over the medium term. Regulators globally have been urged to impose stricter capital requirements to prevent another crisis similar to the latest global turmoil, which was believed to have stemmed from banking failures in advanced economies.

Stricter capital requirements are required under the Basel 3, the updated set of international bank-regulatory standards. For instance, banks are required to have a significant amount of Tier-1 capital in their total capital.

The BSP will implement the tighter capital requirements in full by 2014, ahead of most advanced economies that will implement the new standards on a staggered basis through 2018.

With the deleveraging in the eurozone, banks in the Western region have started to dispose some of their assets in emerging Asian markets, including the Philippines.

Monetary authorities in Asia, however, said that deleveraging by European firms should not be a concern. In fact, they said this could benefit Asian banks through the availability of more markets that European banks were leaving behind.

Tetangco has maintained that the Philippine banking sector remained sound and healthy. He added that the effects of the global economic turmoil on banks in the country would not be significant enough to cause stress.

Documents from the BSP showed that the combined net income of universal and commercial banks in the Philippines amounted to P30.45 billion in the first quarter, up 41 percent from nearly P22 billion in the same period last year.

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MANILA, Philippines – Imagine adding your bank as a friend in a social networking site, chatting about what you can do with your hard-earned deposits, checking out your account details on your mobile phone, and then walking into a branch to finalize a deal with the manager.

These services, however, are not yet being provided by banks despite their readily available and widespread adaptation of technology, according to the study by international software and technology solutions provider SunGard and research group Celent.

According to the Bank Readiness Index (BRI) study released by SunGard, banks have not been able to fully adapt to the changing needs of their customers who are social media-savvy and have mobile devices.

“Around one-third of banks use social media to some degree. More for marketing and less for customer service – just the opposite of what consumers said they preferred,” the BRI study said.

“Few [banks] have an integrated social media plan and fewer still have integrated social media into Customer Relationship Management (CRM), Business Process Management, and compliance systems,” the study said.

Dean Young, SunGard’s Vice President of Product Management, said in his presentation that the BRI was conducted in order to identify global trends affecting banks and their customers and to assess their readiness for these trends.

He said that they wanted to know if the services being offered by banks matched the expectations of consumers, especially now with a rapidly changing technology landscape that give people more capabilities to connect with each other.

They interviewed 102 banks and 1073 bank customers in eight countries, four from the Middle East: Kuwait, Qatar, Saudi Arabia, United Arab Emirates, and four from Southeast Asia: Indonesia, Malaysia, Philippines, and Thailand.

The BRI ranks countries on a scale of 1 to 1000, with 1000 being the best, to measure their readiness to adapt to global trends. The banks were measured in four aspects: Mobility, Multichannel, Social Media, and Customer Metrics.

Philippines had a score of 236 while Indonesia scored 231, Malaysia 285, and Thailand 263. A BRI score of 350 and below was categorized as a “Technology Laggard.”

“The Technology Laggard is a bank whose systems and processes reflect a siloed, branch-centric view of retail banking. This bank offers basic Internet banking solutions but not mobile or tablet banking. There is no multi-channel approach or CRM system in place and no social media strategy,”

According to the study, the Philippines scored relatively high in the Multichannel and Mobility categories. Multichannel means the extent to which banks offer broad and capable access points and organize information across all those points. Mobility is the measure of how much banks can provide services to customer through mobile devices, tablets, etc.

The study found that “consumers are quick to tell other about a good or bad experience with a [bank]. About half would post on Facebook.” Around 20 percent would tweet about it on microblogging site Twitter, it added.

“Banks must embrace the rapidly growing impact of social media on developing consumer attitudes,” the study said.

Only 24 percent of banks surveyed said that they have a comprehensive social media plan while only 11 percent said they used social media to its fullest potential.

The study found that bank customers are becoming increasingly connected and mobile.

They are also becoming more reliant on social media and they put just as much value in online/mobile banking capabilities as the proximity of a bank’s branch when opening an account.

“This trend will continue- but how well are banks prepared to meet these new consumer needs and preferences in the era of mobility and social media?” the study concluded.

It also said that though majority of banks offer online or mobile banking, the services are only basic and “few are doing much with social media.”

“There is insufficient use of analytics to better understand and segment customers, deliver personalized services, support campaigns and targeted marketing,” it said.

The study concluded that “banks must reacquaint themselves with the attributes that their customers most value and dramatically enhance the customer experience,” and “banks must optimize each and every customer relationship, seeking increased levels of risk-adjusted profitability.”

In the end, banks that are able to fully utilize social networking sites will definitely be “liked” more.

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The Ayala-led Bank of the Philippine Islands announced that it would increase its service fee on card withdrawals outside its own network of automated teller machines (ATM).

In the statement below posted on its website, the country's 3rd largest bank in terms of assets said the increase to P15 from the current P10 service charge on withdrawals transacted via the ATMs that are part of the Bancnet, Expressnet and Megalink networks. The higher fees take effect on October 22.

HSBC Philippines gets first Filipino CEO
The first Filipino CEO of British banking and financial services giant HSBC will take on the position starting Dec. 24, the bank said in a statement Wednesday.

Veteran trader Jose Arnulfo “Wick” Veloso told reporters he actually learned of his appoint last Sept. 27 but declined to make any statement ahead of the bank’s official announcement. He was appointed head of HSBC global banking and markets for the Philippines last Aug. 15.

Outgoing HSBC president Tony Cripps will be assigned to Australia.

“While there is a huge responsibility in being the first appointed Filipino to take on the CEO role for HSBC in the Philippines, I am excited at being able to lead an exceptionally dedicated and talented team to take the Group’s Philippine business forward.” Veloso said.

“The Philippines is an important market for the HSBC Group,” the statement read, citing Peter Wong, CEO for Asia Pacific.

Cripps noted Veloso is a seasoned and competent banker. “I am delighted that Wick will be my successor.

“I have worked very closely with him over my three years in the Philippines. He brings with him extensive experience in the financial services industry, and I have no doubt he will be an invaluable asset to HSBC as it drives towards continued growth in this market,” Cripps added.

The bank also appointed Dondi Baltazar, currently senior vice president and head of Trading in the Philippines, as head of Global Markets for the Philippines, effective also Dec. 24.

Corrie Dela Cruz-Purisima has also been appointed head of Global Banking and concurrent head of Debt Capital Markets, also on Dec. 24.

“We continue to invest for growth, focused on building a strong and sustainable business in the Philippines,” said Wong.
“I am sure Wick, Dondi and Corrie will play integral roles in this development going forward,” he added. — VS, GMA newshttp://www.gmanetwork.com/news/story...t-filipino-ceo

Fellow OFW's, friends and relatives of OFW's. I hope to get the sentiments of my fellow OFW's. Share your thoughts. We can take care of ourselves and ready to get this through, together we stand and do something for our dreams, hope, aspirations. We build our own OFW Bank !! A bank of the OFW, for OFW and by OFW's. Can or No Can do??

Smart To Power Macrofinance Bank
Smart Communications, Inc. (Smart) will power the country’s first microfinance bank – mBank Philippines – fully utilizing mobile technology to deliver convenient banking services to Filipinos with little or no access at all to the formal banking system.

Tricia Dizon, Smart financial services head, said that along with other companies they will be launching mBank Philippines to provide members of the low-income population with savings and loan products exclusively on a mobile platform.

mBank Philippines would be a spin off of mCompany, a non-governmental organization, once the Bangko Sentral ng Pilipinas approves its application for a formal banking license. mCompany has already offered pilot services in some areas.

Dizon noted that seven out of 10 Filipinos do not have an account at a formal financial institution because of steep deposit requirements and the absence of banks in remote areas, but almost all Filipinos have a mobile phone.

“By launching a mobile microfinance facility, we will be giving the unbanked access to savings products and bank loans that can help improve their lives,” Dizon said.

“By offering simple and effective financial services, mCompany and eventually mBank seek to increase financial inclusion and ensure that people have enough money at any given moment,” Dizon said.

Once mBank is launched, Smart and Talk ‘N Text subscribers will be able to open a savings account with the help of mBank field agents deployed in their communities. Activated account holders can apply for a loan product that interests them, immediately get a response about their application, and select a weekly repayment schedule – all via their mobile phone.

“The process eliminates the need to travel far to deposit and withdraw money, apply for loans, and pay amortization. This is very convenient especially for those who cannot afford to be absent from work or leave their sari-sari stores,” Dizon said.

“We believe this is the right way to go to drive financial inclusion in the countryside. In our Leyte pilot, we started offering the product on September 26, 2012. By October 16, mCompany already had 110 account holders and had already disbursed R265,700 in loans to Smart subscribers,” Arnaud Ventura, board director of mCompany and co-founder of mBank Holding said.

MANILA, Philippines—Philippine lender Bank of the Philippine Islands said Wednesday it was in talks to acquire local rival Philippine National Bank to create potentially the country’s largest financial institution.

Trading in the two firms was suspended Wednesday as they disclosed that BPI’s majority shareholders were in negotiations to buy PNB, majority-owned by Lucio Tan, the country’s second-richest man.

“We confirm discussions with the Lucio Tan Group and will make the appropriate disclosures in accordance with the (exchange) disclosure rules,” BPI said.

BPI is part of the Ayala conglomerate that is the largest property player in Makati, the Philippine capital’s main business district.

PNB also disclosed: “We confirm that there have been discussions between the Lucio Tan Group and the Ayala Group. We will make the appropriate disclosures within the day once we obtain the necessary board approvals.”

The Philippine Daily Inquirer, quoting unnamed banking sources, said the two sides were in advanced talks.

BPI is now the country’s third-largest lender, with assets of P842.6 billion ($20.48 billion) by the end of 2011, while PNB’s assets amounted to P316.3 billion.

The largest Philippine bank, Banco de Oro with end-2011 assets of P1.1 trillion, is controlled by the family of shopping mall magnate Henry Sy, the country’s richest man.

The Bank of the Philippine Islands of the Ayala group is in advanced talks to acquire a majority stake in Lucio Tan-led Philippine National Bank in what could be a major banking consolidation that would make the Ayala banking arm as big as Banco de Oro Unibank.

Banking sources confirmed that the Lucio Tan group was in discussion with the Ayalas for the union, which could result in a combined entity with total assets of about P1.2 trillion—about the same size as BDO.

An industry source said the Lucio Tan group’s internal valuation of a consolidated banking arm under PNB was over P100 per share but based on market estimates, the Ayalas and the Lucio Tan group might be able to strike a deal at P96 per share, or at a 14-percent premium to current market prices.

PNB shares closed 11.7 percent higher yesterday at P84.10 per share, giving it a market capitalization of P49.86 billion. A total of 7.7 million PNB shares valued at P617.5 million changed hands.

The prospective consolidation would bring BPI, currently the third largest bank in terms of consolidated assets at par with BDO. BPI has about P742 billion in resources, while PNB and Allied Bank have P304.32 billion and P176.69 billion, respectively.

A prospective deal between the Ayalas and the LT group is not expected to affect the consolidation of LT group assets into Tanduay Holdings as only a minority stake each in PNB (34.79 percent) and Allied Bank (27.62 percent) has been committed for infusion into Tanduay.

When asked about the matter, a BPI spokesperson said: “No comment.”

Stock analysts said the prospective consolidation was exciting for the banking industry and that a prospective union between BPI and PNB would provide the best fit, giving the Ayala-led bank a significant Chinese-Filipino foothold.

Industry sources said the LT group had likewise explored the possibility of merging with Metropolitan Bank and Trust Co. but the latter was concerned that a union would only cannibalize its market share.

Tan’s daughter Cherry is married to Alfred Ty, the son of Metrobank founder George Ty.

On the other hand, the Ayala group is very aggressive in expanding its core businesses and is likewise diversifying to new areas like infrastructure.

Ahead of a prospective BPI-PNB union, the LT group is also likely to resolve remaining stumbling blocks to the merger between PNB and Allied Bank, including a delayed regulatory approval by UK’s financial regulators. As PNB has operations in Europe, UK approval was likewise required for the PNB-Allied merger to push through.

BSP: Rural banks up next for 'stress tests'
Rural banks are next in line for a battery of “stress tests” to determine their ability to endure loan defaults and other risks, a ranking official of the Bangko Sentral ng Pilipinas said Friday.

BSP deputy governor Nestor Espenilla Jr. said some assert that it is not necessary for the central bank to have all banks undergo stress tests. “However … systemic risk is an interaction of causes and effects,” he added.http://www.gmanetwork.com/news/story...r-stress-tests

Moody's says PNB, Allied Bank to benefit from BPI acquisition
MANILA – A merger between the Ayala group’s Bank of the Philippine Islands on the one hand and Philippine National Bank and Allied Banking Corp on the other would improve the credit score of the latter two Lucio Tan-owned lenders, according to Moody’s Investors Service.

“BPI’s acquisition of PNB is credit positive for PNB and [Allied Bank] because BPI is fundamentally stronger than the other two banks, and as such will be able to improve their credit profiles,” Moody’s said in a statement.

“Because BPI is the strongest among the three in terms of asset quality and risk-adjusted profitability, we expect the merger to have a positive effect on PNB’s and [Allied Bank’s] respective financial metrics,” the credit rating firm said.

Last week, BPI and PNB announced that they were in discussions for the former's acquisition of the latter. The talks come as PNB has yet to complete its own merger with Allied Bank.

Moody’s maintains a “Ba1” rating on BPI, a “Ba2” rating on PNB, and a “Ba3” rating on Allied Bank. Outlooks for the three lenders are “stable,” which means no change in their ratings is expected in the near term.

“PNB and [Allied Bank] rank lowly among our rated Philippine banks in key credit performance measures despite improvements over the past three years. Both maintain substantial legacy bad loans that continue to weigh on their asset quality,” Moody’s said.

“In addition, both exhibit high credit risk concentration to large borrowers relative to their core capital base, which exposes them to significant credit losses,” the rating firm said.

“Moreover, the boards of directors at both banks are dominated by a controlling shareholder and lack adequate representation by independent directors, both of which threaten their corporate governance,” Moody’s said, referring to Tan.

The rating firm said the absence of financial details on the transaction prevents it from providing a definitive assessment on the credit implication on BPI.

“However, our preliminary assessment is that the transaction would not entail a significant burden on BPI’s credit profile. Assuming that BPI pays two times PNB’s and [Allied Bank’s] book value for Tan’s stakes in both banks, and funds the acquisition through a share swap based on the last traded share price prior to the announcement of the acquisition, we estimate BPI’s Tier 1 capital ratio would increase to 16 percent from 14.5 percent, based on September 2012 financials,” Moody’s said.

“In another scenario in which BPI pays for the acquisition using a 50-50 mix of cash and newly issued equities, we estimate BPI’s Tier 1 capital ratio would decrease to 11 percent,” the rating firm said.

At end-June, BPI was the third-largest bank by assets in the Philippines, while PNB was seventh and Allied Bank, 13th. A merger would catapult the surviving entity to the top spot, with an estimated market share of 19 percent of system assets.http://www.interaksyon.com/business/...pi-acquisition

Guys, I have a question. I am a BPI and Landbank savings account cardholder. How much can I deposit in those banks such that I wouldn't be questioned (eg. source of funds)? I would like to have an anonymous transaction. Thanks again guys.